Published - July 14, 2022 @ 12:49 PM (EET)
On Tuesday, electric vehicle startup Canoo Inc. (NASDAQ:GOEV) signed a definitive agreement with Walmart to buy at least 4,500 of its upcoming electric delivery vans, a significant win for the embattled vehicle maker.
According to the deal, Walmart (NYSE:WMT) will have the option to purchase up to 10,000 units, beginning with the Lifestyle Delivery Vehicle (LDV).
Canoo says the LDV is engineered for high-frequency stop-and-go deliveries and speedy vehicle-to-door drop-off, including grocery and food/meal delivery.
Canoo marks the third major deal signed by Walmart for electric cars. Walmart reserved 5,000 electric vans from General Motors (NYSE:GM) and bought 1,100 from Ford (NYSE:F) E-transit, some of which are already operating, earlier this year.
For the retailer, the deal with Canoo aligns with its goal to reduce its carbon footprint and achieve zero-emission by 2040.
Moreover, Canoo disclosed in the SEC filing that it issued Walmart a warrant to purchase up to a total of 6,1 million shares at an exercise price of $2.15 per share and agreed not to supply any vehicles to Amazon (NASDAQ:AMZN) as part of the deal with Walmart.
"We are proud to have been selected by Walmart, one of the most sophisticated buyers in the world, to provide our high-tech, all-electric, American-made Lifestyle Delivery Vehicle to add to their impressive logistics capabilities", said Investor, Chairman, and CEO Tony Aquila of Canoo.
Following the news, shares of Canoo gained 53% after the stock lost nearly 70% of its value this year amid the selloff in tech stocks and concerns around Canoo's access to capital.
However, the stock movement, which sparked new interest among retail investors, is strictly retail buying as shorts are not expecting the deal to reduce cash burn or anticipated funding needs, says Roth Capital analyst Craig Irwin.
While Canoo finished its first quarter with $104.9 million in cash and access to $600 million in capital to support the start of production, it is unclear whether the funds will be sufficient to complete the Walmart order and others or whether the company will have to raise more money.
After its stock market debut in late 2020, Canoo's shares briefly surged to over $20 but have slid since co-founder and CEO Ulrich Kranz departed last year.
The stock was trading at $3.63 per share as of Tuesday's close.
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